Economic reforms and project plans in Kuwait continue to gather steam with the government reiterating its commitment to rolling out ambitious infrastructure development plans despite the current relatively low oil prices.
Since the launch of a six-pronged economic recovery strategy at the start of the year, aimed at encouraging expansion of public-private partnerships (PPPs), the government has awarded a number of high-profile public construction projects. This followed the new five-year plan which envisions more than US$100 billion in infrastructure spending.
Media reports in April pointed to a robust expansion of the projects market in Kuwait, with the total size of the local projects market, including public, private and planned developments, to be around $252.3 billion, a 2.8 percent year-to-date increase.
Although transportation mega-projects, including a metro and a national rail network, have been delayed, mainly on the back of low oil prices, social infrastructure continues to benefit from the surge in spending. The emphasis on hard and soft infrastructure, including new schools and utilities projects, is expected to support construction industry and non-oil growth in the near term, while a long-term finance agreement reached for the Clean Fuels Project at the end of April will further underpin future oil and gas growth.
Following the creation in 2014 of the Kuwait Authority for Partnership Projects (KAPP), which is tasked with identifying and developing Public Private Partnerships, the agency has announced it will award the main contract for the second phase of the Al Zour North Independent Water and Power Plant, which will produce 1800 MW of electricity and 464,100 cubic meters per day of desalinated water.
This came alongside a contract bid for the $1.5 billion Umm Al Hayman wastewater treatment plant, which opened at the end of April, and a tender for the Kabd municipal solid waste project, expected in late May.
In the oil sector, in early March, the Kuwait National Petroleum Company (KNPC) awarded its largest contract so far this year. The $2.9 billion contract for construction of a new LNG import and regasification terminal was given to a consortium led by South Korea’s Hyundai Engineering and Hyundai Engineering & Construction.
With so many projects being awarded or planned and the government keen on transforming the country into a financial hub for the region, analysts are now placing Kuwait as one of the best investment destinations in the Gulf region. They point to the legislation and legal frameworks that have been drawn up by the government to attract investment into the country, especially Law No. 116/2013 on direct foreign investment, and the role of the Kuwait Direct Investment Promotion Authority (KDIPA) in removing obstacles facing foreign investors and companies targeting Kuwaiti markets.
Meanwhile, Kuwait's National Fund for SME Development and UAE's Khalifa Fund for Enterprise Development (KFED) last week signed a Memorandum of Understanding (MoU) bolstering bilateral cooperation in supporting small and medium enterprises (SME).
The CEO of KFED, Abdullah Al-Darmaki, said that for the past eight years KFED has been goading UAE youth to tap the private sector to start their business ventures there through easy term loans from KFED. He added that signing of the MoU augments efforts by Gulf countries to encourage young entrepreneurs to take the plunge into starting their own small and medium size businesses.
KFED has a capital of two billion Dirhams and focuses its business on giving Emiratis loans to start SMEs, especially to those whose loan requests have been turned down by banks. In that sense, KFED has so far funded no less than 1200 SME projects in the UAE, and seeks to do more of that in Kuwait in view of today's signing of the MoU.
For his part the National Fund Chairman Dr. Mohammad Al-Zuhair spoke about the importance of developing the country's entrepreneurial culture and encouraging and supporting small and medium enterprises in Kuwait. He added that the Fund's main objectives are to increase SME participation in the economy and help create a business-friendly environment for small and medium enterprises and Kuwait's entrepreneurs.
The signing of the MoU came on the sideline of a meeting of the Higher Advisory Board of the National Fund for SME Development which has KFED as a board member.